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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 12, 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 18, 1995
COMMISSION FILE #0-12862
DEP CORPORATION
a Delaware corporation - I.R.S. No. 95-2040819
2101 East Via Arado, Rancho Dominguez, CA 90220
(310) 604-0777
Exhibit Index on page 5
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Item 5 OTHER EVENTS
On April 18, 1995, the Company and its group of seven banks
(the "Bank Group") executed a Conditional Waiver as of April 14, 1995 (the
"Waiver"), arising with respect to the Company's Revolving Credit and Term Loan
Agreement dated August 6, 1993, as amended, (the "Bank Facility"). The Waiver
waives any non-compliance with respect to the period from January 31, 1995,
through April 30, 1995 (the "Waiver Period"), of the Company's net worth, debt
to EBITDA and interest coverage financial covenant ratios set forth in the Bank
Facility. It also waives any non-compliance arising with respect to the Waiver
Period of the Company's leverage ratio covenant, (to the extent that it results
from a write-down, if any, of the carrying value of the Agree and Halsa
intangibles) and any non-compliance with the working capital covenant (to the
extent it would have resulted from the reclassification of the Company's
indebtedness under the Bank Facility as short-term debt due to non-compliance
with any of the above described covenants.)
The Waiver also temporarily reduces the working capital line
of the Bank Facility during the Waiver Period from $28 million to $25 million,
of which $4.4 million remained available to the Company as of April 27, 1995.
Based upon its currently projected earnings and cash flows, management believes
that such amount will be sufficient to finance the Company's operations through
at least the end of fiscal 1995.
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The Waiver is conditioned on the Company's retaining
independent consultants to assist the Company in the development of a strategic
business plan and presenting such final plan to the Bank Group no later than
July 31, 1995.
Management currently anticipates that when the fourth quarter
results are determined, the Company will not be in compliance with the financial
covenants set forth in the Bank Facility. Following presentation of the final
strategic plan to the Bank Group on July 31, 1995, the Company intends to
negotiate with the Bank Group to further amend the financial covenants, based
on the Company's anticipated operations and financial condition. There is no
assurance that the Bank Group will agree to such an amendment.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
DEP CORPORATION
Date: April 27, 1995 By: /s/ Grant W. Johnson
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Grant W. Johnson
Vice President Finance
and Chief Financial Officer
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Exhibit Index
Sequential
Description Page Numbers
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Conditional Waiver dated as of April 14, 1995 6 - 13
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CONDITIONAL WAIVER
DATED AS OF APRIL 14, 1995
This CONDITIONAL WAIVER (this "Waiver") is among DEP CORPORATION, a
Delaware corporation (the "Borrower"), the financial institutions party to the
Credit Agreement referred to below as Lenders (the "Lenders"), and CITICORP
USA, INC., as agent (the "Agent") for the Lenders thereunder.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders and the Agent and The First National
Bank of Boston and City National Bank, as Co-Agents, have entered into a
Revolving Credit and Term Loan Agreement dated as of August 6, 1993, as amended
(as amended to date, the "Credit Agreement", the terms defined therein being
used herein as therein defined unless otherwise defined herein).
(2) The Borrower has requested that the Lenders (a) waive (i) any
Defaults arising under Section 6.01(i) of the Credit Agreement as a result of
written statements by the Borrower in certain of its public disclosure
documents, and (ii) with respect to the period starting on January 31, 1995 and
ending on and including April 30, 1995 (the "Waiver Period"), any Defaults
arising under certain financial covenants contained in Section 5.04 of the
Credit Agreement, as a result of non-compliance therewith, and (b) consent to
the payment by the Borrower of certain deferred compensation.
(3) The Required Lenders are, subject to the satisfaction of, and
continuing compliance by the Borrower with, the terms and conditions set forth
herein, willing to grant the requests of the Borrower.
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Conditional Waiver Under Credit Agreement.
Effective as of the date hereof and subject to (a) the satisfaction of the
conditions precedent set forth in Section 5 hereof, and (b) the continuing
compliance by the Borrower with the provisions of Sections 2 and 4 hereof, the
Lenders hereby waive the following Defaults (collectively, the "Specified
Defaults"):
(i) any Defaults existing under Section 6.01(i) of the Credit
Agreement as a result of written statements in the Borrower's Report
on Form 8-K dated May 27, 1994 and the Borrower's Report on Form 10-Q
dated March 17, 1995;
(ii) any Defaults arising with respect to the Waiver Period
under subsections (b), (e) and (f) of Section 5.04 of the Credit
Agreement as a result of non-compliance with such subsections;
(iii) to the extent such Default arises solely as a result of
the writedown, if any, of the carrying value of the Agree and Halsa
intangibles (and only to such extent), any Default arising with
respect to the Waiver Period under subsection (c) of Section 5.04 of
the Credit Agreement; and
(iv) to the extent such Default arises solely as a result of
the indebtedness under the Credit Agreement being classified, in
accordance with GAAP, as short term debt (and only to
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such extent), any Default arising with respect to the Waiver Period
under subsection (a) of Section 5.04 of the Credit Agreement;
provided, however, that, if the Borrower shall at any time fail to comply with
the provisions of Section 2 or 4 hereof, the Required Lenders may, by written
notice to the Borrower, declare the Waiver Period to be terminated whereupon
the waivers provided in this Section 1 shall be of no further force or effect.
It is understood and agreed that the waivers provided for in this Section 1
shall, until the Waiver Period expires or is terminated, include a waiver of
any increase in interest rate during the Waiver Period under the provisions of
Section 2.06(b) of the Credit Agreement with respect to the Specified Defaults
but that such Section 2.06(b) shall remain in full force and effect with
respect to the occurrence and continuation of any other Event of Default.
SECTION 2. Consent to Certain Deferred Compensation Payments.
Effective as of the date hereof, the Lenders hereby agree that, in addition to
other deferred compensation payments not prohibited by Section 5.02(j) of the
Credit Agreement, the Borrower may make deferred compensation payments to the
individuals identified on Schedule I hereto; provided, however, that (a) such
payments are made pursuant to and in accordance with the Borrower's Executive
Deferred Compensation Plan (the "Plan"), (b) such payments are made solely with
the proceeds of the investment fund (the "Fund") previously established and
maintained by the Borrower for such purpose plus up to $125,000 of other funds
of the Borrower, (c) after giving effect to any such payment, the amount of all
continuing obligations, fixed or contingent, in respect of the Plan does not
exceed the aggregate market value of the Fund (at such time) by more than
$125,000 minus the aggregate amount of such payments made with funds other than
proceeds of the Fund, and (d) the Agent is given notice of each such payment
within three Business Days after such payment is made. The Borrower and the
Lenders agree that any failure by the Borrower to comply with the limitations
set forth in the foregoing proviso shall constitute an Event of Default under
the Credit Agreement.
SECTION 3. Limitation on Aggregate Advances Outstanding under
the Working Capital Facility. The Borrower acknowledges and agrees, and the
Lenders agree, that, during the Waiver Period, (a) the aggregate principal
amount of Working Capital Advances permitted to be outstanding at any one time
shall be limited to $25,000,000, and (b) the Lenders shall have no obligation
to make any Working Capital Advances to the Borrower which would cause the
aggregate outstanding principal amount of Working Capital Advances to exceed
such amount. It is understood and agreed that the limitation on outstanding
Working Capital Advances set forth in this Section 3 may be waived by the
Required Lenders and that, upon the effectiveness of any such waiver, the
obligation of each Lender to make Working Capital Advances in accordance with
such Lender's Working Capital Commitment shall be reinstated to the extent set
forth in such waiver.
SECTION 4. Independent Consultant; Strategic Business Plan.
(a) Independent Consultant. The Borrower shall select and
retain, at the Borrower's expense, an independent consulting firm which shall
be either (i) one of certain consulting firms identified by the Agent to the
Borrower, or (ii) another independent consulting firm reasonably acceptable to
the Agent and the Required Lenders. The Borrower and its Subsidiaries have
agreed to retain The Goldston Group ("Goldston") and Deloitte & Touche LLP
("D&T" and, together with Goldston, the "Consultants") to serve as such
independent consultants. The Borrower hereby confirms that it has selected the
Consultants and the Lenders hereby confirm that (i) they have no objection to
Goldston and D&T serving as independent consultants for the Borrower and its
Subsidiaries, and (ii) the Borrower has satisfied any
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requirement that the Borrower obtain the Lenders' approval with respect to the
independent consultants to be retained. The Borrower shall have retained the
Consultants, and shall have caused the Consultants to commence their review of
the operations of the Borrower and its Subsidiaries, not later than April 14,
1995. The scope of such retention shall be as set forth in the consulting
engagement proposals from The Goldston Group dated March 29, 1995 and Deloitte
& Touche LLP dated March 28, 1995 (collectively, the "Proposals") as delivered
to the Agent by the Borrower under cover memorandum dated March 29, 1995. The
Lenders hereby confirm that they have approved the scope of engagement set
forth in the Proposals. The Borrower shall, and shall cause its officers,
employees and affiliates to, cooperate fully with the Consultants to allow the
Consultants to complete their review of the operations of the Borrower and its
Subsidiaries in accordance with the Proposals.
(b) Access to Consultants. The Borrower shall permit the
Agent and the Lenders (through the Agent), from time to time during normal
business hours, (i) to discuss with the Consultants retained by the Borrower
pursuant to subsection (a) above the business of the Borrower and its
Subsidiaries, and (ii) to have access to the work papers, recommendations and
reports of the Consultants with regard to such business upon the request of the
Agent. The Borrower shall be given not less than two Business Days' prior
notice of, and have the opportunity to have a representative present at, any
such discussions between the Agent and the Consultants which occurs prior to
July 31, 1995.
(c) Strategic Plan. The Borrower shall work together with
the Consultants retained by the Borrower pursuant to subsection (a) above to
develop, and shall present to the Agent and the Lenders (i) not later than June
30, 1995, a written preliminary comprehensive strategic business plan for the
Company and its Subsidiaries, and (ii) not later than July 31, 1995, a written
comprehensive strategic business plan which shall have the approval of senior
management of the Borrower and the Borrower's board of directors. Such
business plan shall encompass all material aspects of the business of the
Borrower and its Subsidiaries as indicated in the Proposals, including, but not
limited to, marketing, projected capital expenditures and asset dispositions,
if any, debt repayment and projected financial information (including brand by
brand profit and loss statements). Such business plan shall incorporate, to
the extent deemed appropriate by the Borrower, the recommendations of the
Consultants, and shall include a discussion of recommendations made by the
Consultants which were not incorporated in the final business plan and the
reasons for rejecting such recommendations.
(d) Effect of Non-Compliance. The Borrower and the Lenders
agree that the failure by the Borrower to comply with this Section 4 shall
constitute an Event of Default under the Credit Agreement.
SECTION 5. Conditions of Effectiveness. This Waiver shall
become effective when the Agent shall have received (a) counterparts of this
Waiver executed by the Borrower and the Required Lenders or, as to any of the
Lenders, advice satisfactory to the Agent that such Lenders have executed this
Waiver, and (b) counterparts of the Consent appended hereto executed by the
Guarantors and Grantors listed therein.
SECTION 6. General Release of Claims. As additional
consideration for the waivers as set forth herein, the Borrower (by its
execution hereof) and each other Loan Party (by its execution of the Consent
appended hereto) and each of their respective agents, employees, directors,
officers, attorneys, affiliates, subsidiaries, successors and assigns
(individually, a "Releasing Party", and collectively, the "Releasing Parties")
each hereby release and forever discharge the Agent and each Lender and all of
their respective agents, direct and indirect shareholders, employees,
directors, officers,
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attorneys, branches, affiliates, subsidiaries, successors and assigns
(individually, a "Released Party", and collectively, the "Released Parties") of
and from all damage, loss, claims, demands, liabilities, obligations (except
for any such obligations pursuant to the terms of the Loan Documents, as
amended to date), actions and causes of action whatsoever (collectively
"Claims") the Releasing Parties and each of them may, as of the date hereof,
have or claim to have against each of the Released Parties, in each case
whether presently known or unknown and of every nature and extent whatsoever on
account of or in any way relating to, arising out of or based upon the First
Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment or
this Conditional Waiver (collectively, the "Restructuring Documents") or the
negotiation or documentation thereof or the amendments to and waivers under the
Loan Documents effected by the Restructuring Documents or the transactions
contemplated thereby, including, without limitation, all such loss or damage of
any kind heretofore sustained, or that may arise as a consequence of the
dealings between the parties up to the date hereof in connection with or in any
way related to the Restructuring Documents. Each Releasing Party further
covenants and agrees that it has not assigned heretofore, and will not
hereafter sue any Released Party upon, any Claim released or purported to be
released under this Section 6, and the Borrower will indemnify and hold
harmless said Released Parties against any loss or liability on account of any
actions brought by any Releasing Party or its assigns or prosecuted on behalf
of any Releasing Party and relating to any Claim released or purported to be
released under this Section 6. This agreement and covenant on the part of the
Releasing Parties, respectively, is contractual, and not a mere recital, and
the parties hereto acknowledge and agree that no liability whatsoever is
admitted on the part of any party with respect to any Claim released or
purported to be released under this Section 6. It is further understood and
agreed that any and all rights under the provisions of Section 1542 of the
California Civil Code are expressly waived by each of the Releasing Parties.
Section 1542 provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
Each of the Releasing Parties acknowledges that the foregoing
release (including the foregoing waiver of the provisions of Section 1542 of
the California Civil Code) was separately bargained for.
Each Released Party acknowledges (without admission as to the
existence of any specific fact) that the foregoing release shall not prevent
any Releasing Party from making evidentiary references, in connection with any
Claim not released or purported to be released hereby, to the negotiation or
documentation of the Restructuring Documents or the amendments to the Loan
Documents effected by the Restructuring Documents or the transactions
contemplated by the Restructuring Documents or the dealings between the parties
in connection with or in any way related to the Restructuring Documents.
The Borrower represents to each Released Party that, as of the
date hereof, neither Robert Berglass nor Grant Johnson has actual knowledge of
facts which would cause the Borrower to prevail on any Claim not released under
this Section 6.
SECTION 7. Reference to and Effect on the Loan Documents.
(a) Upon the effectiveness of this Waiver, on and after the date hereof each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of
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like import referring to the Credit Agreement, shall mean and be a reference to
the Credit Agreement as modified hereby.
(b) Except as specifically modified hereby, the Credit
Agreement and all other Loan Documents are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
Without limiting the generality of the foregoing, the Collateral Documents and
all of the Collateral described therein do and shall continue to secure the
payment of all Secured Obligations under and as defined therein.
(c) The execution, delivery and effectiveness of this Waiver
shall not, except as expressly provided herein, operate as a waiver of any
Default, right, power or remedy of any Lender or the Agent under any of the
Loan Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
(d) The Agent, each Lender party hereto, the Borrower and, by
execution of the Consent appended hereto, each Guarantor specifically
acknowledges and agrees that (i) none of the Company, any Guarantor, the Agent
or any Lender has agreed to any other or future waiver of or amendments to the
Loan Documents, (ii) neither the granting of the conditional waiver described
herein nor the granting of any prior waivers and amendments under the Loan
Documents creates any obligation whatsoever on the part of the Company, any
Guarantor, the Agent or any Lender to grant any other or future waiver or
amendment under the Loan Documents, and (iii) except as specifically set forth
herein, each of the Company, each Guarantor, the Agent and the Lenders have
reserved all rights and remedies under Loan Documents.
SECTION 8. Costs, Expenses and Taxes. The Borrower agrees to
pay on demand all costs and expenses of the Agent in connection with the
preparation, execution, delivery and administration of this Waiver and the
other instruments and documents, if any, to be delivered hereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Agent with respect thereto and with respect to advising the Agent as to
its rights and responsibilities hereunder and thereunder. The Borrower further
agrees to pay on demand all costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Waiver and the other instruments and documents to be delivered hereunder,
including, without limitation, reasonable counsel fees and expenses in
connection with the enforcement of rights under this Section 8. In addition,
the Borrower shall pay any and all stamp and other taxes, and fees, payable or
determined to be payable in connection with the execution, delivery and
performance of this Waiver and the other instruments and documents, if any, to
be delivered hereunder, and agrees to save the Agent and each Lender harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes or fees.
SECTION 9. Execution in Counterparts. This Waiver may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement. Delivery of an executed counterpart of a signature
page to this Waiver or the Consent hereto by telefacsimile shall be effective
as delivery of a manually executed counterpart of this Amendment or such
Consent.
SECTION 10. Governing Law. This Waiver shall be governed by,
and construed in accordance with, the laws of the State of New York.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
DEP CORPORATION
By /s/ Grant Johnson
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Title: Vice President
CITICORP USA, INC.,
individually and as Agent
By /s/ Ruth E. Ford
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Title: Vice President
THE FIRST NATIONAL
BANK OF BOSTON,
individually
and as a Co-Agent
By /s/ Garrett Quinn
---------------------------------
Title: Vice President
CITY NATIONAL BANK,
individually
and as a Co-Agent
By /s/ Rick Sawyer
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Title: Vice President
PNC BANK, NATIONAL
ASSOCIATION
By: /s/ Ted A. Dunn
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Title: Assistant Vice President
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ABN AMRO BANK N.V.
By: /s/ William J. Fitzgerald
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Title: Attorney-In-Fact
By: /s/ Mark Elletson
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Title: Attorney-In-Fact
THE DAIWA BANK, LTD.
By: /s/ Ralph W. Greenwood
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Title: Regional Vice President Credit
(West)
By: /s/ Judith M. Bresnen
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Title: Vice President
BANK HAPOALIM, B.M.
By: /s/ Craig Ciebiera
-----------------------------------
Title: S.V.P.
By: /s/ Lori Lake
-----------------------------------
Title: A.V.P.
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CONSENT
DATED AS OF APRIL 14, 1995
The undersigned, Lavoris-Dep Corporation, Topol-Dep Corporation
and Cuticura-Dep Corporation, as Guarantors under the "Guaranty" and as
Grantors under the "Security Agreements" executed by them, respectively, as
defined in and under the Credit Agreement referred to in the foregoing
Conditional Waiver, each hereby consents to the said Conditional Waiver and
hereby confirms and agrees that (i) the Guaranty and such Security Agreements
are, and shall continue to be, in full force and effect and are hereby ratified
and confirmed in all respects except that, upon the effectiveness of, and on
and after the date of, the said Conditional Waiver, each reference in the
Guaranty and such Security Agreements to the Credit Agreement, "thereunder",
"thereof" or words of like import shall mean and be a reference to the Credit
Agreement as modified by the said Conditional Waiver and (ii) such Security
Agreements and all of the Collateral described therein do, and shall continue
to, secure the payment of all of the Secured Obligations as defined therein.
LAVORIS-DEP CORPORATION
By /s/ Grant Johnson
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Title: Vice President
TOPOL-DEP CORPORATION
By /s/ Grant Johnson
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Title: Vice President
CUTICURA-DEP CORPORATION
By /s/ Grant Johnson
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Title: Vice President
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